State Sen. John Griesheimer has introduced legislation that represents the next phase in the struggle between those who would modernize Missouri’s telecommunications landscape through competition and those satisfied with the status quo of heavy-handed local control.
Before a telephone or power company can provide video service in Missouri, it must acquire a franchise, or license, from every city it will serve. This lengthy process includes endless rounds of hearings, studies, audits and negotiations. Local politicians often extort “public services,” including some irrelevant to telecommunications, such as the beautification of government buildings. It takes months or even years to get the rights to serve one city. At that pace, it could take five to 10 years to wire all of Missouri.
Franchises also don’t come cheap — local bureaucrats ask companies to cough up 5 percent of their annual gross revenue. This hurts consumers as would-be competitors must pass this cost on to their customers.
This is exactly why we don’t see competition in the video market. For years, cable has dominated the industry. The Federal Communications Commission compiles an annual nationwide study on cable prices that shows the industry has been hiking up rates every year at levels well beyond the rate of inflation. Phone companies want to enter the market, but the process costs millions of dollars in fees and would take years to complete.
As Missouri competes with other states for brainpower and technology, local bureaucrats shouldn’t be allowed to stand in the way. Several pioneering states already have taken steps to reform their broken franchise systems, including Texas, where cable rates dropped by 25 percent in the town of Keller after franchise reform made competition possible.
Griesheimer’s new bill fixes many problems plaguing Missouri’s telecommunications market by combining the local franchises into one statewide franchise. This will make the process far simpler and more transparent.
Telephone and power companies stand ready to infuse billions of dollars into Missouri’s economy and telecommunications infrastructure. When these companies finally get the opportunity to compete, consumers will be the ultimate beneficiaries. As telephone companies build high-speed optic cables, we will have access to new video programming that allows greater control of what we watch and when we watch it. Cable operators will then face a crucial choice when it comes to customer service: Shape up, or ship out.
The Missouri General Assembly faces a similar choice with its telecommunication policy. Let’s ensure it makes the right decision.
Kibbe is President and CEO of FreedomWorks, a grass-roots organization with 11,000 members in Missouri fighting for lower taxes, less government and more freedom.